ACS President Anthony Wong discusses how the ACS is responding to the enormous promise of blockchain technology.
Ordering a pizza is a fairly mundane transaction for many Australians. But when Laszlo Hanycecz convinced a Florida man to deliver two pizzas for 10,000 bitcoins back in 2010, he made history for the first real-world bitcoin transaction. Today, cryptocurrencies like bitcoin can be used to purchase everything from clothing, technology, and homewares to travel, artwork and fine dining.
What is most interesting about bitcoin though, is the blockchain technology on which it is based – a revolutionary platform which is spawning applications across a broad array of industry sectors and functions. Just a few examples include smart contracts, neighbourhood microgrids for buying and selling energy, the protection of intellectual property, anti-money laundering (AML) and know your customer (KYC) processes, supply chain auditing, crowdfunding and the sharing economy, to name just a few.
Also known as distributed ledger technology (DLT), blockchain challenges traditional assumptions that financial transactions, ownership records or securities registers must rely on a central authority or public ledger.
By using peer-to-peer networks and cryptography, the blockchain creates an online, distributed ledger that is less susceptible to tampering and can verify the integrity of transactions without the need for a trusted intermediary or third party.
This means that for the first time, individuals and organisations can transact or form agreements with known entities or complete strangers without going through an intermediary such as a bank or rating agency to confirm their identity. The blockchain will even handle functions such as contracting, clearing, settlements and record-keeping.
This has significant implications for the entire financial sector, which, due to its centralised and complex nature, has become more vulnerable to crime and fraud.
When I spoke at the ICT infrastructure and Digital Economy Conference Sarawak (IDECS) 2017 last month, fellow presenter and futurist, Don Tapscott, called blockchain a “game-changer”. Tapscott, who with son Alex co-authored the book, “Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World”, said blockchain’s support for peer-to-peer collaboration models is making many traditional organisational forms redundant while dramatically reducing transaction costs by cutting out the middle-men.
Right now, we have a significant opportunity to play a leadership role in the development and exploitation of blockchain technologies. Australia currently acts as Secretariat for the ISO blockchain standardisation process, which gives us access to the key players around the world.
Our major financial institutions are actively exploring blockchain applications, with the ASX one of the first stock exchanges to undertake blockchain trials and CBA recently piloting blockchain on a trade financing deal with US bank Wells Fargo. Westpac’s Blockchain Hackathon was won last year by local agriculture technology firm, Full Profile, which plans to export its blockchain technology to Canada. Meanwhile, another Aussie blockchain start-up, Power Ledger, was called a global leader in a Bloomberg New Energy Finance report.
It’s early days and the possibilities of blockchain technology are far from being realised. However, there is significant potential for it to revolutionise the way we engage in transactions and establish value and ownership of assets in an increasingly digitised world.
According to the Tapscotts, “As with prior paradigm shifts, blockchain will create winners and losers.”
The Australian Government is paying close attention to blockchain developments and ASIC has developed an information sheet to help companies and individuals evaluate and comply with regulatory requirements.
The ACS is also moving to ensure we understand and can take full advantage of the blockchain opportunity by forming a Blockchain Technical Committee (TC) of experts.
The ACS Blockchain TC will explore the impacts on existing structure and consider questions such as:
- What are the roles of policy-makers, governments and regulators in facilitating and regulating blockchain-enabled interactions?
- The roles of clearing houses, banks, financial institutions and intermediaries in this new digital world?
- How can Australia best develop and then leverage our expertise in blockchain technology?
The ACS looks forward to working closely with government, industry, academia and other stakeholders to maximise the benefits for our economy. In fact, if you’re playing in the blockchain space and would like to be involved in our Technical Committee, contact me at email@example.com.
And as an example of how quickly disruptive technologies like blockchain can change and create new forms of value – those 10,000 bitcoins used to buy pizza back in 2010? They would now be worth $16.8 million. That’s some expensive pizza!
Anthony Wong is President of the ACS and Chief Executive of AGW Consulting P/L, a multidisciplinary ICT, Intellectual Property Legal and Consulting Practice.